Apple will make very little money from taking on the TV market, according to analysis.
TheStreet bases its analysis on a number of assumptions. Itpresumes that Apple will want to make a healthygross margin of 35% atleast; it also assumes Apple will grow its TV market share from around0% in 2012 to about 7% in 2018; and that the television will be pricedaround $1,000 to $2,000.
The report notes that, according to NDP DisplaySearch, TV sales havestagnated at around 250 million units for the past two years. Sales areexpected to see a slow pace of growth in the coming years.
The LCD segment of the market is seeing healthy growth, with thepremium LED segment of the LCD market seeing even fastergrowth, notesthe report. We see TV sales growing to around 285 million by the end ofour forecast period.
Based on comparisons with Apple’s successful onslaught of the mobilephone market, The Street assumes that the Apple iTV will see “about thesame market share growth trajectory as the iPhone.” On this basis, thereport predicts: “This shows that Apple will have close to 20 millioniTV sales in 2018.”
The Street calculates a price estimate of $740 a share for Apple basedon 20 million Apple TV sales by the end of the forecast period, withthe price declining from $1,500 in 2013 to $1,300 in 2018, and grossmargins of 35% down to 30% by 2018.
This is “growth of less than 6% over the current $700 price estimate,”notes the report.
“This goes to show that for all those who seem to believe that the iTVwill be Apple’s next big thing in the market, the iTV doesn’t seem toadd much value to Apple’s stock,” states the report.